BILL NUMBER: AB 1050	CHAPTERED  10/10/99

	CHAPTER   885
	FILED WITH SECRETARY OF STATE   OCTOBER 10, 1999
	APPROVED BY GOVERNOR   OCTOBER 9, 1999
	PASSED THE ASSEMBLY   SEPTEMBER 10, 1999
	PASSED THE SENATE   SEPTEMBER 8, 1999
	AMENDED IN SENATE   SEPTEMBER 3, 1999
	AMENDED IN SENATE   SEPTEMBER 1, 1999
	AMENDED IN SENATE   AUGUST 24, 1999
	AMENDED IN SENATE   AUGUST 16, 1999
	AMENDED IN SENATE   JULY 2, 1999
	AMENDED IN SENATE   JUNE 22, 1999
	AMENDED IN ASSEMBLY   MAY 19, 1999
	AMENDED IN ASSEMBLY   APRIL 27, 1999
	AMENDED IN ASSEMBLY   APRIL 19, 1999
	AMENDED IN ASSEMBLY   APRIL 12, 1999

INTRODUCED BY   Assembly Member Wright

                        FEBRUARY 25, 1999

   An act to amend Sections 1871.7, 1872.4, 1872.8, and 1872.95 of,
to add Section 1872.45 to, and to add and repeal Sections 1874.8 and
1874.81 of, the Insurance Code, and to amend Section 1806 of the
Vehicle Code, relating to insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1050, R. Wright.  Insurance:  fraudulent claims.
   (1) Existing law permits interested persons to file a civil action
for civil penalties plus an assessment, as specified, against a
person who knowingly employs runners, cappers, steerers, or other
persons to procure clients or patients to perform or obtain services
of benefits pursuant to Workers' Compensation or to obtain services
or benefits under a contract of insurance, or that will be the basis
of a claim against an insured individual or his or her insurer.
Existing law provides for specified percentages to be paid to persons
who bring an action to collect the civil penalties.  Existing law
provides for a statute of limitations for fraud of 3 years from the
date of discovery of the facts constituting the fraud.
   This bill would provide that civil penalties are for each
fraudulent claim presented to an insurance company by a defendant
being sued for the civil penalties.  This bill would provide that for
the person filing the civil action the amount to be awarded to the
person by the court from the proceeds of the action shall be at least
30% but not more than 40% if the district attorney or Insurance
Commissioner intervenes and proceeds with the action, and at least
40% but no more than 50% if the district attorney or Insurance
Commissioner does not intervene and proceed with the action.  The
bill would place a maximum on the statute of limitations for an
action for the civil penalties of 8 years from the date of specified
violations.
   (2) Existing law makes it a crime to file or aid in the filing of
false insurance claims.
   This bill would require a district attorney when he or she files a
criminal complaint for violation of specified Penal Code provisions
relating to false insurance claims to provide specified notice to the
affected insurers, the victims, and the Department of Motor
Vehicles.  The bill would require insurers who receive the
notification to rebate any surcharges in premiums, as specified, paid
by an insured victim, and for the Department of Motor Vehicles to
remove any record of the underlying accident that is on the license
record of a victim.  By requiring the district attorney to provide
notification to insurers and to the Department of Motor Vehicles in
these circumstances, this bill would impose a state-mandated local
program.  By requiring premium rebates the bill would amend
Proposition 103.
   (3) Existing law requires each insurer in this state to pay an
annual fee to be determined by the Insurance Commissioner, but not to
exceed $1 annually, for each vehicle insured under an insurance
policy it issues in this state in order to fund increased
investigation and prosecution efforts by district attorneys and other
law enforcement agencies, including the Department of the California
Highway Patrol, of fraudulent automobile insurance claims and
economic automobile theft.  Existing law requires the commissioner to
award 51% of the assessment fees to district attorneys and requires
the district attorneys to submit to the commissioner certain reports
in this regard.
   This bill would require the commissioner to conduct a fiscal audit
of the programs administered by district attorneys under these
provisions at least once every 3 years.  The bill would require the
cost of the fiscal audit to be shared equally between the Department
of Insurance and the district attorney, thus imposing a
state-mandated local program.  This bill would require the Department
of the California Highway Patrol to submit to the commissioner
reports similar to those required of district attorneys under these
provisions.
   (4) Existing law requires the Medical Board of California, the
Board of Chiropractic Examiners, and the State Bar to designate
employees to investigate and report on possible fraudulent insurance
activities.  Existing law requires each of those entities to report
annually to relevant legislative committees regarding their
activities in this regard for the previous year.
   This bill would specify the minimum contents required to be
included in each of those annual reports.
   (5) Existing law regulates motor vehicle theft and motor vehicle
insurance fraud reporting.
   This bill would establish, until January 1, 2007, a coordinated
program of 3 to 10 grants for district attorneys targeted at the
successful prosecution and elimination of organized automobile fraud
activity, as defined.  The program would be funded by the imposition
on each insurer doing business in the state of an annual fee, not to
exceed 50
, to be determined by the commissioner, for each vehicle insured
under an insurance policy issued by the insurer in the state.  This
bill would require the commissioner to adopt emergency regulations
establishing the criteria to be used in awarding these grants.  n
(6) The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state.  Statutory provisions establish procedures for making that
reimbursement, including the creation of a State Mandates Claims Fund
to pay the costs of mandates that do not exceed $1,000,000 statewide
and other procedures for claims whose statewide costs exceed
$1,000,000.
   This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.
   (7) This bill would declare it furthers the purposes of
Proposition 103.  Because this bill would amend Proposition 103, it
is required to further the purposes of Proposition 103 and would
require a 2/3 vote for enactment.
   (8) This bill would state legislative intent regarding the
retroactive effect of certain of the bill's provisions as they relate
to insurance claims or actions existing on January 1, 2000.
   (9) This bill would provide that its provisions would become
operative only if SB 940 of the 1999-2000 Regular Session is enacted
and becomes effective on or before January 1, 2000.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  (a) This act shall be known as the Organized Crime
Prevention and Victim Protection Act of 1999.
   (b) The Legislature finds that organized automobile fraud activity
operating in the major urban centers of the state represents a
significant portion of all individual fraud-related automobile
insurance cases.  These cases result in artificially higher insurance
premiums for core urban areas and low-income areas of the state than
for other areas of the state.  Only a focused, coordinated effort by
all appropriate agencies and organizations can effectively deal with
this problem.
  SEC. 2.  Section 1871.7 of the Insurance Code is amended to read:
   1871.7.  (a) It is unlawful to knowingly employ runners, cappers,
steerers, or other persons to procure clients or patients to perform
or obtain services or benefits pursuant to Division 4 (commencing
with Section 3200) of the Labor Code or to procure clients or
patients to perform or obtain services or benefits under a contract
of insurance or that will be the basis for a claim against an insured
individual or his or her insurer.
   (b) Every person who violates any provision of this section or
Section 549, 550, or 551 of the Penal Code shall be subject, in
addition to any other penalties that may be prescribed by law, to a
civil penalty of not less than five thousand dollars ($5,000) nor
more than ten thousand dollars ($10,000), plus an assessment of not
more than three times the amount of each claim for compensation, as
defined in Section 3207 of the Labor Code or pursuant to a contract
of insurance.  The court shall have the power to grant other
equitable relief, including temporary injunctive relief, as is
necessary to prevent the transfer, concealment, or dissipation of
illegal proceeds, or to protect the public.  The penalty prescribed
in this paragraph shall be assessed for each fraudulent claim
presented to an insurance company by a defendant and not for each
violation.
   (c) The penalties set forth in subdivision (b) are intended to be
remedial rather than punitive, and shall not preclude, nor be
precluded by, a criminal prosecution for the same conduct.  If the
court finds, after considering the goals of disgorging unlawful
profit, restitution, compensating the state for the costs of
investigation and prosecution, and alleviating the social costs of
increased insurance rates due to fraud, that such a penalty would be
punitive and would preclude, or be precluded by, a criminal
prosecution, the court shall reduce that penalty appropriately.
   (d) The district attorney or commissioner may bring a civil action
under this section.  Before the commissioner may bring that action,
the commissioner shall be required to present the evidence obtained
to the appropriate local district attorney for possible criminal or
civil filing.  If the district attorney elects not to pursue the
matter due to insufficient resources, then the commissioner may
proceed with the action.
   (e) (1) Any interested persons, including an insurer, may bring a
civil action for a violation of this section for the person and for
the State of California.  The action shall be brought in the name of
the state.  The action may be dismissed only if the court and the
district attorney or the commissioner, whichever is participating,
give written consent to the dismissal and their reasons for
consenting.
   (2) A copy of the complaint and written disclosure of
substantially all material evidence and information the person
possesses shall be served on the district attorney and commissioner.
  The complaint shall be filed in camera, shall remain under seal for
at least 60 days, and shall not be served on the defendant until the
court so orders.  The local district attorney or commissioner may
elect to intervene and proceed with the action within 60 days after
he or she receives both the complaint and the material evidence and
information.  If more than one governmental entity elects to
intervene, the district attorney shall have precedence.
   (3) The district attorney or commissioner may, for good cause
shown, move the court for extensions of the time during which the
complaint remains under seal under paragraph (2).  The motions may be
supported by affidavits or other submissions in camera.  The
defendant shall not be required to respond to any complaint filed
under this section until 20 days after the complaint is unsealed and
served upon the defendant.
   (4) Before the expiration of the 60-day period or any extensions
obtained under paragraph (3), the district attorney or commissioner
shall either:
   (A) Proceed with the action, in which case the action shall be
conducted by the district attorney or commissioner.
   (B) Notify the court that it declines to take over the action, in
which case the person bringing the action shall have the right to
conduct the action.
   (5) When a person or governmental agency brings an action under
this section, no person other than the district attorney or
commissioner may intervene or bring a related action based on the
facts underlying the pending action unless that action is authorized
by another statute or common law.
   (f) (1) If the district attorney or commissioner proceeds with the
action, he or she shall have the primary responsibility for
prosecuting the action, and shall not be bound by an act of the
person bringing the action.  That person shall have the right to
continue as a party to the action, subject to the limitations set
forth in paragraph (2).
   (2) (A) The district attorney or commissioner may dismiss the
action notwithstanding the objections of the person initiating the
action if the person has been notified by the district attorney or
commissioner of the filing of the motion, and the court has provided
the person with an opportunity for a hearing on the motion.
   (B) The district attorney or commissioner may settle the action
with the defendant notwithstanding the objections of the person
initiating the action if the court determines, after a hearing, that
the proposed settlement is fair, adequate, and reasonable under all
the circumstances.  Upon a showing of good cause, the hearing may be
held in camera.
   (C) Upon a showing by the district attorney or commissioner that
unrestricted participation during the course of the litigation by the
person initiating the action would interfere with or unduly delay
the district attorney's or commissioner's prosecution of the case, or
would be repetitious, irrelevant, or for purposes of harassment, the
court may, in its discretion, impose limitations on the person's
participation, including, but not limited to, the following:
   (i) Limiting the number of witnesses the person may call.
   (ii) Limiting the length of the testimony of those witnesses.
   (iii) Limiting the person's cross-examination of witnesses.
   (iv) Otherwise limiting the participation by the person in the
litigation.
   (D) Upon a showing by the defendant that unrestricted
participation during the course of the litigation by the person
initiating the action would be for purposes of harassment or would
cause the defendant undue burden or unnecessary expense, the court
may limit the participation by the person in the litigation.
   (3) If the district attorney or commissioner elects not to proceed
with the action, the person who initiated the action shall have the
right to conduct the action.  If the district attorney or
commissioner so requests, he or she shall be served with copies of
all pleadings filed in the action and shall be supplied with copies
of all deposition transcripts, at the district attorney's or
commissioner's expense.  When a person proceeds with the action, the
court, without limiting the status and rights of the person
initiating the action, may nevertheless permit the district attorney
or commissioner to intervene at a later date upon a showing of good
cause.
   (4) If at any time both a civil action for penalties and equitable
relief pursuant to this section and a criminal action are pending
against a defendant for substantially the same conduct, whether
brought by the government or a private party, the civil action shall
be stayed until the criminal action has been concluded at the trial
court level.  The stay shall not preclude the court from granting or
enforcing temporary equitable relief during the pendency of the
actions.  Whether or not the district attorney or commissioner
proceeds with the action, upon a showing by the district attorney or
commissioner that certain actions of discovery by the person
initiating the action would interfere with a law enforcement or
governmental agency investigation or prosecution of a criminal or
civil matter arising out of the same facts, the court may stay
discovery for a period of not more than 180 days.  A hearing on a
request for the stay shall be conducted in camera.  The court may
extend the 180-day period upon a further showing in camera that the
agency has pursued the criminal or civil investigation or proceedings
with reasonable diligence and any proposed discovery in the civil
action will interfere with the ongoing criminal or civil
investigation or proceedings.
   (5) Notwithstanding subdivision (e), the district attorney or
commissioner may elect to pursue its claim through any alternate
remedy available to the district attorney or commissioner.
   (g) (1) (A) If the district attorney or commissioner proceeds with
an action brought by a person under subdivision (e), that person
shall, subject to subparagraph (B), receive at least 30 percent but
not more than 40 percent of the proceeds of the action or settlement
of the claim, depending upon the extent to which the person
substantially contributed to the prosecution of the action.
   (B) Where the action is one that the court finds to be based
primarily on disclosures of specific information, other than
information provided by the person bringing the action, relating to
allegations or transactions in a criminal, civil, or administrative
hearing, in a legislative or administrative report, hearing, audit,
or investigation, or from the news media, the court may award those
sums that it considers appropriate, but in no case more than 10
percent of the proceeds, taking into account the significance of the
information and the role of the person bringing the action in
advancing the case to litigation.
   (C) Any payment to a person under subparagraph (A) or under
subparagraph (B) shall be made from the proceeds.  The person shall
also receive an amount for reasonable expenses that the court finds
to have been necessarily incurred, plus reasonable attorney's fees
and costs.  All of those expenses, fees, and costs shall be awarded
against the defendant.
   (2) (A) If the district attorney or commissioner does not proceed
with an action under this section, the person bringing the action or
settling the claim shall receive an amount that the court decides is
reasonable for collecting the civil penalty and damages.  Except as
provided in subparagraph (B), the amount shall not be less than 40
percent and not more than 50 percent of the proceeds of the action or
settlement and shall be paid out of the proceeds.
   (B) If the person bringing the action, as a result of a violation
of this section has paid money to the defendant or to an attorney
acting on behalf of the defendant in the underlying claim, then he or
she shall be entitled to up to double the amount paid to the
defendant or the attorney if that amount is greater than 50 percent
of the proceeds.  That person shall also receive an amount for
reasonable expenses that the court finds to have been necessarily
incurred, plus reasonable attorney's fees and costs.  All of those
expenses, fees, and costs shall be awarded against the defendant.
   (3) If a local district attorney has proceeded with an action
under this section, one-half of the penalties not awarded to a
private party, as well as any costs awarded shall go to the treasurer
of the appropriate county.  Those funds shall be used to investigate
and prosecute fraud, augmenting existing budgets rather than
replacing them.  All remaining funds shall go to the state and be
deposited in the General Fund and, when appropriated by the
Legislature, shall be apportioned between the Department of Justice
and the Department of Insurance for enhanced fraud investigation and
prevention efforts.
   (4) Whether or not the district attorney or commissioner proceeds
with the action, if the court finds that the action was brought by a
person who planned and initiated the violation of this section, that
person shall be dismissed from the civil action and shall not receive
any share of the proceeds of the action.  The dismissal shall not
prejudice the right of the district attorney or commissioner to
continue the action on behalf of the state.
   (5) If the district attorney or commissioner does not proceed with
the action, and the person bringing the action conducts the action,
the court may award to the defendant its reasonable attorney's fees
and expenses if the defendant prevails in the action and the court
finds that the claim of the person bringing the action was clearly
frivolous, clearly vexatious, or brought primarily for purposes of
harassment.
   (h) (1) In no event may a person bring an action under subdivision
(e) that is based upon allegations or transactions that are the
subject of a civil suit or an administrative civil money penalty
proceeding in which the Attorney General, district attorney, or
commissioner is already a party.
   (2) (A) No court shall have jurisdiction over an action under this
section based upon the public disclosure of allegations or
transactions in a criminal, civil, or administrative hearing in a
legislative or administrative report, hearing, audit, or
investigation, or from the news media, unless the action is brought
by the Attorney General or the person bringing the action is an
original source of the information.
   (B) For purposes of this paragraph, "original source" means an
individual who has direct and independent knowledge of the
information on which the allegations are based and has voluntarily
provided the information to the district attorney or commissioner
before filing an action under this section which is based on the
information.
   (i) Except as provided in subdivision (j), the district attorney
or commissioner is not liable for expenses that a person incurs in
bringing an action under this section.
   (j) In civil actions brought under this section in which the
commissioner or a district attorney is a party, the court shall
retain discretion to impose sanctions otherwise allowed by law,
including the ability to order a party to pay expenses as provided in
Sections 128.5 and 1028.5 of the Code of Civil Procedure.
   (k) Any employee who is discharged, demoted, suspended,
threatened, harassed, or in any other manner discriminated against in
the terms and conditions of employment by his or her employer
because of lawful acts done by the employee on behalf of the employee
or others in furtherance of an action under this section, including
investigation for, initiation of, testimony for, or assistance in an
action filed or to be filed under this section, shall be entitled to
all relief necessary to make the employee whole.  That relief shall
include reinstatement with the same seniority status the employee
would have had but for the discrimination, two times the amount of
backpay, interest on the backpay, and compensation for any special
damages sustained as a result of the discrimination, including
litigation costs and reasonable attorney's fees.  An employee may
bring an action in the appropriate superior court for the relief
provided in this subdivision.  The remedies under this section are in
addition to any other remedies provided by existing law.
   (l)(1) An action pursuant to this section may not be filed more
than three years after the discovery of the facts constituting the
grounds for commencing the action.
   (2) Notwithstanding paragraph (1) no action may be filed pursuant
to this section more than eight years after the commission of the act
constituting a violation of this section or a violation of Section
549, 550, or 551 of the Penal Code.
  SEC. 3.  Section 1872.4 of the Insurance Code is amended to read:
   1872.4.  (a) Any company licensed to write insurance in this state
that believes that a fraudulent claim is being made shall, within 60
days after determination by the insurer that the claim appears to be
a fraudulent claim, send to the Bureau of Fraudulent Claims, on a
form prescribed by the department, the information requested by the
form and any additional information relative to the factual
circumstances of the claim and the parties claiming loss or damages
that the commissioner may require.  The Bureau of Fraudulent Claims
shall review each report and undertake further investigation it deems
necessary and proper to determine the validity of the allegations.
Whenever the commissioner is satisfied that fraud, deceit, or
intentional misrepresentation of any kind has been committed in the
submission of the claim, he or she shall report the violations of law
to the insurer, to the appropriate licensing agency, and to the
district attorney of the county in which the offenses were committed,
as provided by Sections 12928 and 12930.  If the commissioner is
satisfied that fraud, deceit, or intentional misrepresentation has
not been committed, he or she shall report that determination to the
insurer.  If prosecution by the district attorney concerned is not
begun within 60 days of the receipt of the commissioner's report, the
district attorney shall inform the commissioner and the insurer as
to the reasons for the lack of prosecution regarding the reported
violations.
   (b) This section shall not require an insurer to submit to the
bureau the information specified in subdivision (a) in either of the
following instances:
   (1) The insurer's initial investigation indicated a potentially
fraudulent claim but further investigation revealed that it was not
fraudulent.
   (2) The insurer and the claimant have reached agreement as to the
amount of the claim and the insurer does not have reasonable grounds
to believe that claim to be fraudulent.
   (c) Nothing contained in this article shall relieve an insurer of
its existing obligations to also report suspected violations of law
to appropriate local law enforcement agencies.
   (d) Any police, sheriff, disciplinary body governed by the
provisions of the Business and Professions Code, or other law
enforcement agency shall furnish all papers, documents, reports,
complaints, or other facts or evidence to the Bureau of Fraudulent
Claims, when so requested, and shall otherwise assist and cooperate
with the bureau.
   (e) If an insurer, at the time the insurer, pursuant to
subdivision (a) forwards to the Bureau of Fraudulent Claims
information on a claim that appears to be fraudulent, has no evidence
to believe the insured on that claim is involved with the fraud or
the fraudulent collision, the insurer shall take all necessary steps
to assure that no surcharge is added to the insured's premium because
of the claim.
  SEC. 4.  Section 1872.45 is added to the Insurance Code, to read:
   1872.45.  A district attorney who files a criminal complaint
pursuant to Section 549 or 550 of the Penal Code shall promptly do
all of the following:
   (a) Notify each insurer affected by the acts that are the subject
of the criminal complaint of the existence of the complaint and the
names of all persons insured by the insurer who are the victims.
   (b) Notwithstanding any other provision of law, when an insurer
receives notification pursuant to subdivision (a), and the insurer
has increased the premiums of a person who is a victim because of a
claim that is the subject of the criminal complaint, the insurer
shall promptly rebate to that person the increased premiums that were
charged to and paid by that person.
   (c) Notify the Department of Motor Vehicles of the criminal
complaint and the names of all persons who are the victims.
   (d) Notify all the persons who are the victims in simple
understandable language that a criminal complaint has been filed and
that subdivision (b) of Section 1806 of the Vehicle Code requires the
Department of Motor Vehicles not to record the accident on the
record of the victim.
  SEC. 5.  Section 1872.8 of the Insurance Code is amended to read:
   1872.8.  (a) Each insurer doing business in this state shall pay
an annual fee to be determined by the commissioner, but not to exceed
one dollar ($1) annually for each vehicle insured under an insurance
policy it issues in this state, in order to fund increased
investigation and prosecution of fraudulent automobile insurance
claims and economic automobile theft.  Thirty-four percent of those
funds received from ninety-five cents ($0.95) of the assessment fee
per insured vehicle shall be distributed to the Bureau of Fraudulent
Claims for enhanced investigative efforts, 15 percent of that
ninety-five cents ($0.95) shall be deposited in the Motor Vehicle
Account for appropriation to the Department of the California Highway
Patrol for enhanced prevention and investigative efforts to deter
economic automobile theft, and 51 percent of the funds shall be
distributed to district attorneys for purposes of investigation and
prosecution of automobile insurance fraud cases, including fraud
involving economic automobile theft.
   (b) (1) The commissioner shall award funds to district attorneys
according to population.  The commissioner may alter this
distribution formula as necessary to achieve the most effective
distribution of funds.  Each local district attorney desiring a
portion of those funds shall submit to the commissioner an
application detailing the proposed use of any moneys that may be
provided.  The application shall include a detailed accounting of
assessment funds received and expended in prior years, including at a
minimum (A) the amount of funds received and expended; (B) the uses
to which those funds were put, including payment of salaries and
expenses, purchase of equipment and supplies, and other expenditures
by type; (C) results achieved as a consequence of expenditures made,
including the number of investigations, arrests, complaints filed,
convictions, and the amounts originally claimed in cases prosecuted
compared to payments actually made in those cases; and (D) other
relevant information as the commissioner may reasonably require.  Any
district attorney who fails to submit an application within 90 days
of the commissioner's deadline for applications shall be subject to
loss of distribution of the money.  The commissioner may consider
recommendations and advice of the bureau and the Commissioner of the
California Highway Patrol in allocating moneys to local district
attorneys.  Any district attorney that receives funds shall submit an
annual report to the commissioner, which may be made public, as to
the success of the program administered.  The report shall provide
information and statistics on the number of active investigations,
arrests, indictments, and convictions.  Both the application for
moneys and the distribution of moneys shall be public documents.  The
commissioner shall conduct a fiscal audit of the programs
administered under this subdivision at least once every three years.
The cost of a fiscal audit shall be shared equally between the
department and the district attorney.  Information submitted to the
commissioner pursuant to this section concerning criminal
investigations, whether active or inactive, shall be confidential.
If the commissioner determines that a district attorney is unable or
unwilling to investigate and prosecute automobile insurance fraud
claims as provided by this subdivision or Section 1874.8, the
commissioner may discontinue the distribution of funds allocated for
that county and may redistribute those funds to other eligible
district attorneys.
   (2) The Department of the California Highway Patrol shall submit
to the commissioner, for informational purposes only, a report
detailing the department's proposed use of funds under this section
and an annual report in the same format as required of district
attorneys under paragraph (1).
   (c) The remaining five cents ($0.05) shall be spent for enhanced
automobile insurance fraud investigation by the bureau.
   (d) Except for funds to be deposited in the Motor Vehicle Account
for allocation to the Department of the California Highway Patrol for
purposes of the Motor Vehicle Prevention Act, (Chapter 5 (commencing
with Section 10900) of Division 4 of the Vehicle Code), the funds
received under this section shall be deposited in the Insurance Fund
and be expended and distributed when appropriated by the Legislature.

   (e) In the course of its investigations, the Bureau of Fraudulent
Claims shall aggressively pursue all reported incidents of probable
fraud and, in addition, shall forward to the appropriate disciplinary
body the names of any individuals licensed under the Business and
Professions Code who are suspected of actively engaging in fraudulent
activity along with all relevant supporting evidence.
   (f) As used in this section "economic automobile theft" means
automobile theft perpetrated for financial gain, including, but not
limited to, the following:
   (1) Theft of a motor vehicle for financial gain.
   (2) Reporting that a motor vehicle has been stolen for the purpose
of filing a false insurance claim.
   (3) Engaging in any act prohibited by Chapter 3.5 (commencing with
Section 10801) of Division 4 of the Vehicle Code.
   (4) Switching of vehicle identification numbers to obtain title to
a stolen motor vehicle.
  SEC. 6.  Section 1872.95 of the Insurance Code is amended to read:

   1872.95.  (a) Within existing resources, the Medical Board of
California, the Board of Chiropractic Examiners, and the State Bar
shall each designate employees to investigate and report on possible
fraudulent activities relating to workers' compensation, motor
vehicle insurance, or disability insurance by licensees of the board
or the bar.  Those employees shall actively cooperate with the bureau
in the investigation of those activities.
   (b) The Medical Board of California, the Board of Chiropractic
Examiners, and the State Bar shall each report annually, on or before
March 1, to the committees of the Senate and Assembly having
jurisdiction over insurance on their activities established pursuant
to subdivision (a) for the previous year.  That report shall specify,
at a minimum, the number of cases investigated, the number of cases
forwarded to the bureau or other
       law enforcement agencies, the outcome of all cases listed in
the report, and any other relevant information concerning those cases
or general activities conducted under subdivision (a) for the
previous year.  The report shall include information regarding
activities conducted in connection with cases of suspected automobile
insurance fraud.
  SEC. 7.  Section 1874.8 is added to the Insurance Code, to read:
   1874.8.  (a) Each insurer doing business in this state shall pay
an annual fee to be determined by the commissioner, but not to exceed
fifty cents ($0.50) annually for each vehicle insured under an
insurance policy it issues in this state, in order to fund the Bureau
of Fraudulent Claims and an Organized Automobile Fraud Activity
Interdiction Program.  The commissioner shall award three to 10
grants for a coordinated program targeted at the successful
prosecution and elimination of organized automobile fraud activity.
The grants may only be awarded to district attorneys.
   (b) In determining whether to award a district attorney a grant,
the commissioner shall consider factors indicating organized
automobile fraud activity in the district attorney's county,
including, but not limited to, the county's level of general criminal
activity, population density, automobile insurance claims frequency,
number of suspected fraudulent claims, and prior and current
evidence of organized automobile fraud activity.  Funding priority
shall be given to those grant applications with the potential to have
the greatest impact on organized automobile insurance fraud
activity.
   (c) All participants of a grant referred to in subdivision (a)
shall coordinate their efforts and work in conjunction with the
bureau, other participating agencies, and all interested insurers in
this regard.  Of the funds collected pursuant to this section, 42.5
percent shall be distributed to district attorneys, 42.5 percent
shall be distributed to the Bureau of Fraudulent Claims, and 15
percent shall be distributed to the Department of the California
Highway Patrol.  Funds distributed pursuant to this section to the
Bureau of Fraudulent Claims and to the Department of the California
Highway Patrol shall be used to fund bureau and Department of the
California Highway Patrol investigators who shall be assigned to work
solely in conjunction with district attorneys who are awarded
grants.  Each grantee shall be notified by the Bureau of Fraudulent
Claims of the investigators assigned to work with the grantee.
Nothing shall prohibit the referral of any cases developed by the
Bureau of Fraudulent Claims to any appropriate prosecutorial entity.

   (d) A grant under this section shall be awarded on the basis of a
single application for a period of three years and shall be subject
where applicable to the requirements of subdivision (b) of Section
1872.8, except for the requirement that grants be awarded according
to population.  Continued funding of a grant shall be contingent upon
a grantee's successful performance as determined by an annual review
by the commissioner.  Any redirection of grant funds under this
section shall be made only for good cause.  The Department of the
California Highway Patrol shall submit to the commissioner, for
informational purposes only, an annual report on its expenditure of
funds under this section in the same format as is required of
grantees under this section.
   (e) There shall be no prohibition against a joint application by
two or more district attorneys for a grant award under this section.

   (f) The bureau shall report, on or before January 1, 2005, to the
committees of the Senate and Assembly having jurisdiction over
insurance on the results of the grant program established by this
section, including funding distributed to the Department of the
California Highway Patrol.
   (g) For purposes of this section "organized automobile fraud
activity" means two or more persons who conspire, aid and abet, or in
any other manner act together, to engage in economic automobile
theft as defined in subdivision (f) of Section 1872.8, or to violate
any of the following provisions in relation to an automobile
insurance claim:
   (1) Section 650 or 6152 of the Business and Professions Code.
   (2) Section 750 of the Insurance Code.
   (3) Section 549, 550, or 551 of the Penal Code.
   (h) This section shall remain in effect only until January 1,
2007, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2007, deletes or extends
that date.
  SEC. 8.  Section 1874.81 is added to the Insurance Code, to read:
   1874.81.  (a) The commissioner shall adopt emergency regulations
establishing the criteria that shall be used to award grants to
district attorneys under Section 1874.8.  In addition to the
requirements of subdivision (b) of Section 1874.8, the criteria shall
include all of the following:
   (1) Suggested ratios of investigators to attorneys that the
commissioner believes would result in an effective use of funds
provided through a grant, taking into consideration the enforcement
plans that the commissioner anticipates will be proposed by grantees.

   (2) Administrative expenses that the commissioner deems allowable,
both as a percentage of a grant and by category of expense.
   (3) Benchmarks suitable for measuring the attainment of the
objectives of a grant.
   (4) Standard data and reporting formats that the commissioner
shall require all grantees to provide when reporting to the
commissioner about grants.
   (5) Any other criteria deemed by the commissioner to be necessary
for the efficient and effective administration of this program,
including a commitment for full coordination and cooperation with all
organizations funded by this chapter.
  (b) The regulations required by subdivision (a) shall be adopted in
accordance with the Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340), Part 1, Division 3, Title 2 of the
Government Code), and the adoption of those regulations shall be
deemed an emergency and necessary for the immediate preservation of
the public peace, health, and safety or general welfare.
   (c) This section shall remain in effect only until January 1,
2007, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2007, deletes or extends
that date.
  SEC. 9.  Section 1806 of the Vehicle Code is amended to read:
   1806.  (a) The department shall file all accident reports and
abstracts of court records of convictions received under this code,
and in connection therewith, shall maintain convenient records or
make suitable notations in order that an individual record of each
license showing the convictions of the licensee and all traffic
accidents in which the individual was involved, except those where,
in the opinion of a reporting officer, another individual was at
fault, are readily ascertainable.  At its discretion the department
may file and maintain these accident reports and abstracts by
electronic recording and storage media and after transcribing
electronically all available data from the accident reports and
abstracts of conviction may destroy the original documents.
Notwithstanding any other provisions of law, the recorded facts from
any electronic recording and storage device maintained by the
department shall constitute evidence of the facts in any
administrative actions instituted by the department.
   (b)  When the department receives notification pursuant to
subdivision (c) of Section 1872.45 of the Insurance Code, the
department shall remove from the license record of each victim any
record of his or her involvement in the accident which is the subject
of the criminal complaint.
  SEC. 10.  Notwithstanding any other provision of law, the
Department of Insurance is authorized to and shall adopt emergency
regulations to implement the provisions of this act.
  SEC. 11.  The Legislature finds and declares that this act furthers
the purposes of Proposition 103 as approved by the electorate on
November 8, 1988.
  SEC. 12.  The Legislature intends that Sections 3 and 4 of this act
have retroactive effect to the extent that they are applicable to
any insurance claims or actions existing on January 1, 2000.
  SEC. 13.  Notwithstanding Section 17610 of the Government Code, if
the Commission on State Mandates determines that this act contains
costs mandated by the state, reimbursement to local agencies and
school districts for those costs shall be made pursuant to Part 7
(commencing with Section 17500) of Division 4 of Title 2 of the
Government Code.  If the statewide cost of the claim for
reimbursement does not exceed one million dollars ($1,000,000),
reimbursement shall be made from the State Mandates Claims Fund.
  SEC. 14.  This act shall become operative only if Senate Bill 940
of the 1999-2000 Regular Session is enacted and becomes effective on
or before January 1, 2000.
